LTN Smart Contracts

 

The things companies will do for their Agreement Cloud suites. Last Thursday, e-signature company DocuSign announced that it had reached a $188 million cash deal to acquire contract analytics provider Seal Software, further solidifying the ongoing partnership between the two companies.

For years, DocuSign has been reselling Seal's agreement analytics solution as "DocuSign Intelligent Insights." In March 2019, the company doubled down on that relationship by investing $15 million in Seal with the hopes of adding Seal's AI-powered capabilities to its own Agreement Cloud suite, which focuses on contract preparation, signing and management.

Per Seal president Jim Wagner, that deal gave both companies the opportunity to ensure that their respective customers and products worked well together. "It's just been a natural evolutionary process," Wagner said.

According to Thursday's news release, that "natural evolutionary process" is expected to be made final in the first half of DocuSign's fiscal year, but has already been approved by each company's board of directors. Still, the more things change, the more they stay the same, and it appears that DocuSign's Agreement Cloud will continue to remain a core priority following the acquisition.

"While the reseller relationship with Seal was one thing, we wanted to do more. By acquiring Seal, it will be possible to integrate Seal's AI technology and value proposition across the entire Agreement Cloud. … And we will also benefit from Seal's deep technology expertise, and its broad experience applying AI to agreements," said Scott Olrich, chief operating officer at DocuSign.

The work springing from DocuSign's March 2019 investment in Seal has already provided some proof of concept. For example, the same AI that has propelled Seal's focus on contract analytics has already been integrated into the Agreement Cloud suite's auto-tagging feature, which automatically identifies where electronic tags should be placed on a document for items such as signatures or dates.

"Seal's technology will add a new range of AI capabilities, driven by advanced natural language processing, text analytics and semantic analytics," Olrich said.

To be sure, Wagner also sees the potential for the way contracts are managed to become even smarter moving forward.

"Seal AI can definitely help that happen, whether it's making decisions around risk, whether it's making decisions around who needs to see a contract and sign-off or whether it's making decisions around how a contract can be revised," Wagner said.

But Seal isn't the only automated player in the contract game. BlackBoiler, for instance, has a tool on the market that redlines any potential issues that exist inside a given a contract. A startup named Pactum also released its first AI-powered contract negotiation tool last September. But building the necessary workflows and interfaces—as well as the document ingestion required—presents a significant challenge to new players looking to move into the AI contract space.

While bringing Seal in-house could further boost DocuSign's ongoing efforts with regards to AI—which began in earnest with the company's 2017 acquisition of machine learning startup Appuri—the deal isn't a one-way street. Per Olrich, Seal customers will receive deeper access to the Agreement Cloud Suite, which could fit nicely with the demand Wagner sees among clients for a more end-to-end approach to contracts.

"The things that we do for our customers today, it's very common for those same customers to say, 'Hey, could you do just a little bit more? Could you help us to prepare our agreements? Could you help us on an ongoing basis to help manage those contracts?" Wagner said.

Speaking of those Seal customers, Olrich said DocuSign planned to continue selling the company's contract analytics application post-acquisition. As for how Seal's pre-existing employees will be folded into the company, those answers may not become clear until after the acquisition has closed. The same goes for Seal's ongoing partnerships with other organizations.

"The acquisition is expected to close in the first half of DocuSign's fiscal year, so we're focused on business-as-usual operations right now," Olrich said.